Ohio Appeals Court Deals Blow to Debt Elimination Scheme

By: Andrew J. Sonderman, Esq.

On June 30, the Court of Appeals for the Tenth District (Franklin County) affirmed a summary judgment for a credit union client of the Firm based on a credit card default (BMI Credit Union v. Timothy D. Burkitt, Case No. 09AP-1024) in an Appeal from the Franklin County Municipal Court.  That much of the decision is unremarkable.

This decision is notable because the debtor attempted to employ a defense, and asserted a counterclaim, based on an internet debt elimination scheme employing sham pleadings disseminated through various websites.  The debtor’s bizarre theory was that BMI Federal Credit Union (“BMI”) utilized his credit to obtain funding for his credit card transactions.

The debtor sought to support this claim by providing several documents as exhibits, including bogus form 1099’s for two years purporting to reflect non-existent loans by the debtor to BMI.  The debtor also submitted an affidavit as an exhibit to his amended counterclaim labeled “DEMAND FOR DEBT VALIDATION”.  This is a form he adapted from an Internet website.  The Court noted that the “purported affidavit” set forth debtor’s personal lack of “record evidence” on 22 separate legal or factual points “ranging from the relatively straightforward…to the largely unintelligible” (1 see endnote).  The purported affidavit required a sworn affidavit in response, and stated that failure to rebut each and every point in the “Demand” would be deemed admission of all points.

After holding that the affidavits and exhibits BMI submitted were sufficient to sustain its burden to demonstrate that no genuine issue of material fact existed and that BMI was entitled to judgment as a matter of law, the Court held that the “Demand” purported affidavit failed to demonstrate any genuine issue of material fact.  First, the Court held that the “Demand” did not constitute denial of the documentary evidence BMI submitted.  It noted the document instead sought to “raise legal arguments regarding appellant’s liability for the debt owed on the account” as follows:

These arguments have no support in the law or are irrelevant to the issue of appellant’s liability for debt owed on an account.  Finally, there is no basis in the law for the process by which appellant claimed that the “DEMAND FOR DEBT VALIDATION” established his lack of liability for the debt owed.

Although the Court’s decision could have ended at that point with affirmance of the judgment below, fortunately it went on to deal with BMI’s motion to strike several sham pleadings filed by the debtor.  These included a “CERTIFICATE OF FOREIGN JUDGMENT” attaching as an exhibit a “PRIVATE ADMINISTRATIVE DEFAULT JUDGMENT – DECISION”.  This document purported to be a judgment in the amount of $1,800,000 against BMI and finding that the debtor owed nothing on the credit card, rendered by a panel of three notaries public acting as “private administrative judges”.  That document also imposed a penalty of an additional $2,000,000 for any attempt to reverse the decision of the notary panel.  Accompanying this “Certificate” were the affidavits of the three notaries repeating their conclusions that the debtor owed nothing on the card and that he was entitled to damages of $1,800,000.

The Court granted BMI’s motion to strike, finding:

[T]he documents have no basis in the law.  Section 1, Article IV of the Ohio Constitution vests all judicial power in the state in “a supreme court, courts of appeals, courts of common pleas and divisions thereof, and such other courts inferior to the supreme court as may from time to time be established by law.”  There is no provision in Ohio law allowing notaries public to constitute a court that may award judgments enforceable in the state.  Although the “judgment” filed by appellant purports to be from outside the courts of Ohio and the United States, the authority of the members of the panel supposedly comes from their status as notaries public, a status that comes from their commission by the State of Ohio.

The Court also granted BMI’s motion to strike another debtor’s motion to vacate the municipal court’s judgment for lack of subject matter jurisdiction.  This “ouster” of jurisdiction was also based on the purported preemptive effect of the “Private Administrative Judgment” of the notary panel.  The Court also granted BMI’s motion for attorneys’ fees as sanctions under Appellate Rule 23.  Finally the Court granted BMI’s motion to strike, and for attorneys fees as sanctions, as to another motion the debtor filed identified as “NOTICE OF UNCLEAN HANDS AND DEMAND THAT CASE BE DISMISSED”.

While the employment of these internet-based debt elimination scams has been proliferating, there have been few judicial precedents dealing with the invalidity of the tools.  These schemes have routinely ascribed judicial powers to notaries public and claimed preemptive effect in their “judgments”.  This decision provides some much-needed precedent in creditor efforts to meet and defeat such tactics.

(1) The Court quoted this example of the latter:

“TIMOTHY D. BURKITT has no record or evidence that, in part, TIMOTHY D. BURKITT’S remedy is not provided within the Supplemental Rules of Admiralty, wherein the Remedy to a hostile presentment, which is a criminal scienter act, is to file a Certificate of Exigency with the Clerk of Court (Warrant Officer), who is then [sic] accept, concur and agree to all statements and claims made herein by TIMOTHY D. BURKITT, by simply remaining silent pursuant to 5 U.S.C. 556(d)”.

If you have any questions, please contact Andrew J. Sonderman, Esq. Andrew is Of Counsel and concentrates his practice in the Litigation & Defense department of the Columbus office of Weltman, Weinberg & Reis Co., LPA. He can be reached at 614-857-4383 or via email at asonderman@weltman.com.


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